Glossary of Cryptocurrency Terms

The following glossary prepared by Nugget’s News is loaded with terms that you will likely encounter while navigating the cryptocurrency and blockchain ecosystem. Keep it handy!

A

Address

A unique string of letters and numbers to and from which cryptocurrency is sent. An address—which is usually a hashed version of a public key—functions like an email address.

Altcoin

A cryptocurrency that functions similarly to—but not exactly the same as—bitcoin. Typically, founders will detail in their whitepaper how their project’s altcoin is distinct from bitcoin.

B

Bitcoin

A peer-to-peer network of nodes that maintain a blockchain-based distributed ledger of bitcoin balances. The cryptocurrency native to the Bitcoin network is bitcoin.

Block

A discrete group of valid transaction data that is cryptographically tied to the previous block; collectively forming a chain of blocks (i.e., a blockchain).

Block Explorer

A website or software application that allows users to browse and analyse the entire history of a specific blockchain network.

Block Height

The number of blocks that exist between a given block and the genesis block. The eighth block to be added to a given blockchain will have a block height of seven, for example.

Block Reward

The amount of newly minted cryptocurrency and transaction fees automatically awarded by the blockchain protocol to a miner when they successfully validate a new block.

Blockchain

A database created and maintained by a peer-to-peer network of nodes. Blockchains comprise individual blocks that are each cryptographically linked to one another.

Broker

An individual or firm (i.e., a brokerage firm) that typically charges a fee or commission for executing buy and sell orders submitted by cryptocurrency investors.

BUIDL

A deliberate misspelling of ‘build’, this term is essentially a reminder to focus on improving the quality of tech and projects occupying the space.

c

Confirmation Time

The amount of time it takes for an unconfirmed cryptocurrency transaction to be included into the blockchain by miners. Transaction fee size can greatly affect confirmation time.

Cryptocurrency

A scarce digital asset or digital form of money enabled by blockchain technology. Cryptocurrencies are native to particular blockchain networks (e.g., bitcoin to Bitcoin).

Cryptography

The practice and study of encrypting and decrypting information through complex mathematics Cryptography is a significant component of blockchain technology.

e

Ethereum

An open-source, decentralised computing infrastructure that uses blockchain technology to synchronise and store changes in state. The cryptocurrency native to Ethereum is ether.

Exchange

An online platform that allows buyers and sellers to trade a range of cryptocurrencies using fiat currency or other cryptocurrencies.

F

Fiat Currency

Money that has no intrinsic value and is declared legal tender by a government. Examples of fiat currencies include the U.S. dollar, Japanese yen, and Australian dollar.

FOMO

An acronym for ‘fear of missing out’, FOMO refers to the anxiety that one feels when they believe they’re missing out on a potentially lucrative investment or trade opportunity.

FUD

Short for fear, uncertainty, and doubt, FUD refers to any baseless, negative information that is intentionally spread by those seeking to gain—often financially—from FUD-induced hysteria.

Futures

A type of derivative contract that represents a binding agreement to buy or sell a given cryptocurrency at a specified price and date. Upon expiration, futures are either cash-settled or physically delivered.

G

Gas

A unit value that quantifies the work Ethereum does. Gas exists in order to incentivise node operators on the Ethereum network to process transactions.

Genesis Block

The first block in a blockchain. Because its block height is always equal to zero, the genesis block is also referred to as ‘block zero’.

H

Halving

A scheduled event in which the amount of newly minted cryptocurrency awarded for successfully mining a block (i.e., the block subsidy) halves.

Hash

The values returned by a hash function—a deterministic mathematical algorithm that maps data of variable size to a new fixed-size set of data.

Hash Rate

The speed at which miners are computing hashes. In the cryptocurrency space, measurements of hash rate are typically approximations.

HODL

A deliberate misspelling of ‘hold’, the phrase originated in 2013 when a user posted to the Bitcoin Forum message board, “I AM HODLING.” It is used to reinforce a long-term outlook by cryptocurrency owners.

L

Long

A trading position opened by investors and traders who buy a cryptocurrency with the expectation to sell it at a higher market value in the future.

m

Mainnet

A fully developed and deployed blockchain protocol that is able to facilitate the sending and receiving of cryptocurrency by users.

Margin Trading

A method of trading cryptocurrencies where traders use funds borrowed from third parties in order to leverage their positions.

Market Cap

Calculated by multiplying circulating supply by market price, market cap(italisation) represents the total trading value of a given cryptocurrency.

Mempool

Short for ‘memory pool’, a mempool is a collection of all cryptocurrency transactions that are waiting to receive their first confirmation from a miner.

Multi-Signature

A digital signature scheme that enables multiple users to authorise a cryptocurrency transaction before it is broadcasted to the corresponding blockchain network.

n

Node

A participant in a blockchain network that communicates with other nodes to ensure its security and integrity. Nodes are able to validate transactions.

o

Off-Ramp

A solution that allows investors and traders to convert cryptocurrencies to fiat currencies. Off-ramps are offered by most leading cryptocurrency exchange operators.

On-Ramp

A solution that allows investors and traders to convert fiat currencies to cryptocurrencies. On-ramps are offered by most leading cryptocurrency exchange operators.

Options

A type of derivative contract that gives the owner the right—but not the obligation—to buy or sell an underlying cryptocurrency at a specified price on or before a specified date, depending on the form of the option.

Oracle

A blockchain middleware that serves as a secure connection between smart contracts and off-chain data; significantly bolstering the functionality of smart contracts.

P

Private Key

A unique string of letters and numbers that essentially functions as a user’s digital signature. It is vital that private keys are kept secret.

Proof of Stake

A mechanism by which block validators are selected based on how much cryptocurrency they are staking (i.e., committing funds to help maintain blockchain network).

Proof of Work

A mechanism by which cryptocurrency miners expend computing power to solve cryptographic puzzles; proving they have done so by writing the solution to the blockchain.

Public Key

A unique string of letters and numbers that is visible on a blockchain. A public key can be derived from a private key—but the opposite is not possible.

R

Rekt

A slang version of the word “wrecked” that is most commonly used to describe a margin trader who has just had their position liquidated.

s

Satoshi

The smallest denomination of bitcoin (i.e., one hundred millionth of a single bitcoin, or 0.00000001 BTC). The plural form—satoshis—is commonly shortened to ‘sats’.

Satoshi Nakamoto

The name used by the person(s) who invented Bitcoin, authored the Bitcoin whitepaper, and published the original Bitcoin client software.

Seed Phrase

Also known as a mnemonic phrase, a seed phrase—which is typically 12 or 24 words in length—stores the information needed to recover a wallet.

Short

A trading position opened by investors and traders—known as short sellers—who believe the market value of a given cryptocurrency will decline in the future.

Smart Contract

Computer code that is able to be stored and executed on a blockchain. Smart contracts self-execute when and if certain predetermined conditions are met.

Soft Fork

A code change in a blockchain protocol that is backwards-compatible. That is to say, soft forks do not mandate all participating nodes update their software.

Stablecoin

A type of cryptocurrency designed to maintain as stable a price as possible. Despite offering the same utility, the form and function of stablecoins differ tremendously.

Stacking Sats

Bitcoiners use this Matt Odell-coined term to share ways they’ve been accumulating bitcoin. Common examples: buying on Cash App, earning via Lolli, and profitably trading BTC-paired altcoins.

T

Testnet

An alternative blockchain network that is used—predominantly by developers and programmers—for testing and experimentation purposes.

Transaction

A collection of information the blockchain needs in order to transfer cryptocurrency. Transactions are not valid unless they are signed with the appropriate private key.

 

Transaction Fee

An amount of cryptocurrency included in a transaction that is collected by a miner of said cryptocurrency. Transaction fees incentivise miners to process transactions.

W

Wallet

A software application or hardware device that manages private keys. These keys are needed to access the specific blockchain address to which a user’s cryptocurrency belongs.

Whitepaper

A document prepared by a project’s founders detailing the problem the project addresses and how a blockchain-based cryptocurrency is fundamental to said project’s existence.